Elder and Estate Planning

Serving as Executor or Trustee

If you’re an executor or trustee, it is likely not something you asked to do. Many times parents name a child as executor or successor trustee but don’t tell the child or share important information until the child must take over because your parent has died or become incompetent.

Your first step in taking on the job of executor or trustee is to understand your role and responsibilities and to get help so you can get off to a good start. It’s not a role to take lightly.

“You don’t want to set up your Executor or Trustee for failure,” says Dennis Toman, founder of The Elderlaw Firm in Greensboro, North Carolina and a Certified Elder Law Attorney.

He adds, “If you proceed without understanding what’s required, you can expect extra aggravation, unending red tape, family disputes and even law suits. It’s often not just about dealing with the money or the lawyers or the courts. Sometimes disputes arise over personal property, like family keepsakes or jewelry.”

An Executor is named in a Will to administer the estate. The Executor must gather assets, pay bills, ensure that final tax returns are filed, file reports required by the Court and divide the personal property and other assets in accordance with the deceased’s last wishes stated in his or her Will. The Executor’s job usually lasts from a few months to two years.

By contrast, if you’re asked to be the Trustee of an ongoing Trust, your job could go on for many years or even decades. Often a parent is their own initial Trustee, but a child will be named as a successor Trustee. That child will need to take over the Trust upon the parent’s death or if the parent resigns as Trustee or becomes incapable of managing trust due to Alzheimer’s or other illness. “How long a Trust lasts depends on what is written in the Trust Agreement,” says Toman. “Some Trusts end at a parent’s death, while others continue for many years; some even continue as long as the parent’s children or grandchildren are living.” The Trustee is responsible for investing trust assets during the term of the Trust, making distributions to beneficiaries and filing tax returns. Sometimes the Trustee must make decisions that aren’t popular with the beneficiaries in order to follow the provisions of the Trust. A Trustee’s job often is more difficult and with more potential for conflict than an being Executor.

“As Trustee, you can be required to pay from your own assets if the courts decide you’ve mismanaged the trust,” Toman says. Executors can be sued as well, but because the Executor’s responsibilities end upon completion of the estate there is less time for things to go wrong.

When you’re asked to be Executor or Trustee, you should look out for some red flags that might make you think carefully before saying yes. These might include the following:

There is already family friction

A natural heir is being disinherited or receiving a reduced share

The trust was created with do-it-yourself software or online, or sold by an insurance agent rather than being prepared by an experience estate planning lawyer

You’re being put in charge of a sibling’s money

You’re concerned about the Trust creator’s competency or they can’t give you organized financial records

You can start by getting a copy of the will or trust to read beforehand. You might also want to sit down with the lawyer who drafted the document to discuss your duties and the situation you’re likely to face, or you could get your own attorney.

If you’re serving as Executor or Trustee, you should not worry continuously about being sued or making mistakes. Nearly all trust administrations go smoothly, especially when the Trustee gets the right help and stays in communication with the Trust beneficiaries.

If you’re ready to get started, call us at (336) 378-1122 or click here

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